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Squawk on the Street

News/Business. Melissa Lee, Carl Quintanilla, David Faber. Opening bell market action. New.

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02:59:59

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480

TOPIC FREQUENCY

Carl 22, Us 20, Jim 13, Europe 13, Jc Penney 9, The S & P 8, Penney 8, Ron Johnson 8, Sears 7, Italy 6, Simon 6, Dell 5, Rick Santelli 5, Apple 5, New York 5, Johnson 5, Chicago 5, Rick 5, Russell 4, China 4,
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  CNBC    Squawk on the Street    News/Business. Melissa Lee, Carl Quintanilla,  
   David Faber. Opening bell market action. New.  

    February 28, 2013
    9:00 - 11:59am EST  

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stock of the day, groupon, the company posting a loss. just heard jim cramer talking about it the company reveal it had began to take a smaller cut of the revenues on daily deals during the holidays. it sacrificed revenue and profit to attract and keep merchants. all right. we will show you what just one quick thing, what these guys in the back do when they have nothing better to do. they put me -- they put leaseman into my hair. if anybodyist th if anybody thinks leaseman should get hair -- don't you think? >> i like people the way they are. don't change. >> don't change. >> stay golden, ponyboy. >> do not do the ron insana. keep it off. make sure you join us tomorrow.
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"squawk on the street" is next.. that was an image could i do without. i'm carl quintanilla, melissa lee, jim cramer, david faber. we begin 89 points from the all-time closing high. just this side of positive and chicago pmi on the way. europe has gains this morning. tokyo rebounded along with the rest of asia. china pmi is out tonight. >> our road map this morning starts with what could be a record-setting day. as carl mentioned, the dow just 89 points away from its all-time high, sit a day away from the potential sequester cuts kicking n >> the bleeding continues at jc penney. sales down a whopping 28% from the holiday quarter. how much time does ron johnson
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have to turn things around in the stock down 40% since they took over? >> speak of bloodbaths, group reason shares taking a dive on its much, much wider quarterly loss. analysts not betting on the company being able to outage zohn amazon on its new strat joif selling goods. we begin with the dow taking aim at record territory after a second consecutive triple digit gape. the blue chips now less than 20 points from their all-time closing high setback on october 9, 2007. the dow's intraday record high reached two days later, hitting 14,198. jim, it could be a very important day for the dow but a lot of people will say what's going on with the s & p 500, nasdaq and russell 2,000? the dow hitting higher highs, the s & p, nasdaq and russell not following that same pattern. >> the dow lagged last year, up 16%. i think that the s & p is doing fine, not going to say is doing
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fabulously. same time, the market is shrugging off these negatives. i think that the market is -- the overall market still acts terrifically. i keep expect program selling. the old dateses, we get to the milestones what would happen is the futures would burst out. ys milestones what would happen is the futures would burst out. i think the market is stronger than anybody thinks. >> the week that has been, jim, and whether or not this is one giant crystallized by the dip example. is that what we are in? >> i said last time, this market is rebutting all the presumptions of negativitnegati where were the buyers monday, supposed to be freaking aboutitily? felt like that was program selling and we get a series of good numbers and you get buyers come bang, selling in that last hour, i'm now deeming phony.
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futures, no buy backs, markets collapsed. turned out to be wrong, it collapsed. >> here an accommodative monetary policy, reasonable valuations, i guess, you would argue? >> yes, i would argue that. activists making things happen. >> even though theity tall yap situation is going on, he indicated he might be open to more easing, stimulus that would put a backstop on the european markets, at least for a now, despite the uncertaintitily. >> we have the southwester starting. >> what is that? >> that has become a footnote to all of this. trouble going to sleep tonight, think about the sequester. >> that is the wrong word. just too hard. if you polled people, say, at a knicks game, sequester what do
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they think that is? like a fuel five thing, baseball. just too hard for people to get -- criminal justice system gripeds to a halt, you will never fly again, the national parks are closed and not going to be able to deter terrorists, otherwise -- >> the thunder birds, air force pilot, jet he is. >> i'm going to spam. spam i think -- spam inspected 23 years ago, the cans. >> hormel all-time high yesterday. >> what a stock that is. >> spices, jelly and spam. hormel, smucker and mccormick. >> definitely inspected those things within our lifetime. >> what you want for the bunker. at all-time highs. the bunker trade. >> the defense stock's at an all time high. so bad for defense, why did huntington ingalls have a great quarter? new port news. a disconnect. we keep trying to figure out why doesn't the sequester hurt bristol-myers, why isn't bristol-myers going down?
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>> mkm looks at all the hikes of the week, the home depots, the texans, the well points, home depot, i mentioned. why would you hike a dividend if you are worried about cash flow going into this period, supposed to be so bad. dominos innish tate yaits a 20-cent dividend. >> nordstrom announces a buy back. >> i do want to joint macropeople who come on the network. what was the growth of the economy? >> i will give put disfunction of the u.s. government is planning our demise over the long term unless we can get it together. doesn't mean you shouldn't by the s and p noufrm you probably should. >> thank you for not saying because of the 2040 problem
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withed me care i will go out there now and short the naz damage. other than apple, you think you can get away with shorting things. am, did you see the release ex1 billion itunes, i got it because i'm men of itunes. i tunes content tops am. why doesn't this get the stock out of the rut? there we go. >> a good day to talk retailers. we said earlier, another setback for jc penney. >> you call that a setback? >> sorry. >> ceo ron johnson, efforts to traps form the company, the department store chain down sharply in the premarket on news of a much wider than expected fourth quarter loss. same-store sales down in the third period. margins weakened. last night on the earnings webcast, johnson acknowledged making big mistakes and says he is overhauling the no discounts pricing strategy unveiled more than a year ago. >> we have brought back sales. we have brought back coupons for our rewards members. although we still call them gifts. and we will offer sales each and
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every week as we move forward. but we will do it differently than we did in the past. we don't need to artificially mark up prices to create the illusion of savings. >> the pile-on here is almost too easy. web business down 34%. the post today on how they have enlisted sergio zileman, the architect of new coke, to help run marketing >> >> oh, that's great. >> he has been called delusional. >> ought to do zileman, they got to rename the company. >> new jc penney? >> got come up with something? >> completely abandoned their to old customer who doesn't recognize them anymore. >> should go back to -- call themselves jcp, go back to jc penney, signalling a return. what was interesting, they did a surveys have took 600 samples, 67% of the feedback was negative because people indicated that they grew up with jc penney, had a life-long relationship, jc penney abandoned them, gave up
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the coupons, promotion, customers don't know what to make of the new store. johnson's may ya cull parks $4.3 billion in sales, how much was lost under johnson since he took over, $4.3 billion. >> how long can this man keep thinks job? people losing their jobs, 31% down -- how long? what do you have to do to lose your job in this country? >> i give him another four months, 27 days. >> you are going to give him the 27 extra days? you are a forgiving man. >> i think my favorite lines is i just want to comment, there's a rumor today about jc penney, incredible layoffs coming two weeks ago, 300 people. valentine's day, this or that. he is combatting the negativity u >> he is. certainly resetting the bar. i would think if he is around fourth quarter --
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>> easier conversation, right? >> i was on that show. you go in, did he say that carter's is doing better. the feet pajama people. he did say jewelry was doing -- joe fresh r on the site. joe fresh. >> yes. >> i'm following give him the benefit of the doubt. home department goes from 20% down to 10%. >>? sarcasm, correct? >> completely and utterly. by the way, sears -- >> what do you do with jc penney? short the heck of it? >> already 40% short. >> some things are -- >> i'm running it. thinking what to do if i'm running it. >> sitting back at j jchljj crad co? >> look on the credit side. go against the preferred. >> shocked how long the guy has been there keeps making mistake after mistake.
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if i was running jc penney, find which of the stores are working, like sears has done, put money in those stores and close the ones underperforming. >> sears is putting money in stores? >> sears had a good quarter. why do you laugh? >> because everything's been put into a different relief through the prism of jcp, right? >> jcp would make anybody look good, right? >> kohl's, you name it. >> american motors look good if they were -- this is gimballs and littss. bradlees, really bad comparison. you think we are doing badly? look at bradlees? ej corvette. 11 -- >> david, in terms of the cash, they missed the target and payables went up. >> yes, they did. >> pushing out what they owe to the current quarter as opposed to paying it the fourth quarter, it artificially inflates cash.
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>> do have two large shareholders, needed to done equity offer of some kind, some sort of an offering to raise money could they conceivably do it? offset any concern at all on the part of vendors, those who finance those vendors in. >> think carl eye can comes in and announces a 13% short. >> we can call carl icahn. >> he is probably not up. >> you have the icahn nailed. >> had it for a little bit. haven't spoken to him a while. >> a lot of other discussion today about kohl's, despite the
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weak guidance, looking for very little or no growth in the quarter or the year. morgan stanley cutting sak's to underweight, looking the cross creek and volatile macrosetup. >> kohl's, they have tremendous value but did say the last couple of week he is of the quarter were hideous. they fell on their sword. you go to kohl's -- >> as you know i often do. i buy slacks there >> kohl's has great slashing sonoma. get a half a pant for $6. >> i forgot park i buy trouser there not slacks. >> you guys laugh at me. i go to kohl's, i have a good one on route 22 in new jersey, you would be surprised, tremendous, just they don't have the good credited card penetration, jc penney, not very good -- this shut problem with penny's, jc penney has sephora, i don't need to go to sephora, pbh, i can go -- there's
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nothing-to-distinguishing. if you said to me, jim, where did you get a suit, i said jc penney, would you say uh. it's the name. like no one feels like -- and there's no distinguishing -- why i'm amazed run gren is able to distinguish macy's, argue jc penney's, a loft home turn around on martha stewart. what happens if martha stewart loses that court case? just another thing johnson did wrong? >> had how long he lasts, is there a point which investors say i'm not going into a holiday season again with this guy. right? >> right. i think it is time to goes to grants, to go to s klein. honestly, i do want to go in with this guy? conference call starts off like the groupon conference call with all the positives, everything -- these are all the things. >> alternative reality. >> i know. >> hello. >> peter pan. neverland. neverland syndrome, david. >> yeah. >> is that what we are dealing with? >> neverland syndrome what they call it.
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>> make that up or -- i just came up with that now. pretty good, wasn't it? better than your daughter's play? >> no nothing could be better than that. >> aw. >> circle back to these names in a bit. when we come back, debate willing twitter's value. is the social networking firm really worth $10 billion? first, the groupon skid. how low can the daily deals website go as it loses a quarter of its market value last night? take one more look at pa market features is. is today the day we hit the all-time. >> "squawk on the street" live from post nine when we come back. ♪ [ construction sounds ] ♪ [ watch ticking ] [ engine revs ] come in. ♪ got the coffee. that was fast. we're outta here. ♪ [ engine revs ] ♪
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groupon said it took a smaller cut of the daily deals on the holidays to keep merchants. jim, speaking of neverland, that groupon call was like andrew mason, are you in touch with reality? he was saying it's hard to believe that just a year ago, we were just a daily deals website. it's hard to believe that your stock is down 70% since its ipo price, not including today's tumble. >> i thought that was the most
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unrealistic conference call i have been on in multiple years. i have thinking about that retain world, a retailer by the name of two guys from harrison, ron johnson and andrew mason, two guys from fantasy land. an extraordinarily bad conference call. al leiter. >> food pitcher for the mets. >> they are here to ring the opening bell. snoop at this pi is here. >> snoopy? >> snoopy doesn't have -- >> snoop dog. >> in jc penney, everyone else gets a little, right? the mason call was just honestly, the groupon call was -- it was one of those calls, herb greenberg spends his whole life trying to find something this bad. to just -- there it s.
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>> then as well as, albeit late to the party, down grades, saying they are no longer a platform for merchant bus more of a discount inventory retailer which puts them right in amazon's crosshairs. >> i have known that, i never took advantage of that brazilian thing -- >> brazilian wax? >> miss the days when you bring that up. >> go back to august 19, 2010. this shook the world did a gap. 25 off of a $50 purchase at gap. this is what got everybody going. and that was it. it flamed out. it was a one-hit wonder. >> you wonder whether there was a real business model there plenty of people who threw their hands up at the time, looked at the road show, you can view on the internet. >> pilgrimage to chicago. >> figure it out. understand it who was in charge? you look back now at groupon saying -- a lot of questions if
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they are a sustainable business. >> linkedin was the survivor and now the deliver. linkedin is a great site. >> great piece in the times this morning. journal. >> linkedin, they would come on tv, they had a very definitive look at what was gonna be good. linkedin rallies. i was very suspicious initially. what a wrong call by me. they have it going. jc penney lost a snowball, linkedin rallies, caesar's cash in, another one, david, you love. one one page of the "wall street journal," everything you need to know. >> they will be glad hear you say that. >> why not? >> nice, good paper. i used to work there when we come back, two straight days of triple digit gapes what is the best way to ride the bullish momentum? take a ride with cramer, his mad dash next. a little indecision creeping in here, a heck of a session no matter what happens.
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let's get the mad dash, a few minutes before the bell. we mentioned sears, margins up not down. >> exactly. really terrific ceo retired, and
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he left the company in great shape. i want to point out the fact that you have domestic comparable sales stores at sears up. okay. here's what i'm thinking is happening. this housing trend is so strong that it's a rising tide lifting all boats. like david fish a and i were talking off camera, runt skeptical about sears? i'm not sceptical about housing. if you're not sceptical about housing, you can build a case for sears. >> inventory, a large part of this, yes? >> yes. look at the same time, making progress, but unlike ron johnson, eddie lamp the says our focus continues to be on our core customers but there's more work to do not like he is oblivious. i do like their internet, doing well, versus jc penney's internet, faltering beyond believe. >> most posting 30% comps up, not down. >> on the jc penney website, frankly, it's fine, just not exciting. >> how about monster? >> monster beverage an
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unbelievable story, i like to have a little monster before i come on the show every morning. >> can't tell. >> jpmorgan says sales trends decelerating throughout the quarter. here is what matters. internationals doing great. taking shares from red bull. this is one of the things people felt there would be health issues, go over a cup of coffee versus monster and how a cup of coffee has more caffeine. i think this story is done going as well on monster. >> 52. remember that. when we come back, will we have a record-breaking dine wall street in the dow taking aim at new all-time highs, the opening bell with snoopy is just in a moment. recognize me.
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micronews, when is bernanke going to recognize things are better? he is winning when it comes to the top down news. he covers by top down even when the bottom's up impresses. shops at penne's, maybe and feels he has to keep rates low. the plethora of good data. the feds, you mentioned that seeing good things. we get keystone pipeline, put people to work. i think you will see real momentum building, just went sequester is supposed to cool the momentum. >> and we still got chicago pmi in about 20 minutes or so. of course, china pmi tonight. the land mines, if you want to consider them, are there. opening bell is here. let's get to the exchange. met life and major league baseball. [ opening bell ]
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celebrating the 2013 tournament starting march 1st. man, they are loud. over it nasdaq, first internet bancorp celebrating the recent ipo and 14th anniversary. look out for hearing loss here today. these guys are revved up. >> people love baseball. i love al leiter on the mlb network, on the yes network, i think the most informed baseball commentator. >> really? >> i think he is fabulous. >> i don't know i have heard al very long. >> really good. >> lots to watch today. bipartisan and noble is one, 1.9%, out with its earnings, a surprise fiscal third quarter loss. across the board, the sales were weak, digital revenues down 26%. wasn't this supposed to be the savior of the company, digital revenues down 26%. college book stores, bright spot, if you can call it that only 1 plus percent. online sales -- >> funny, the book stores
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themselves are the bright spot of the business. of course, leonard ridge yo not made a formal proposal to acquire them in terms of the price. publicly disclosed. but the stock did move up on that possibility. there was a time it looked like the nook was going to capture a great deal of market share and you are be one of the platforms going to succeed along perhaps with the ipad and the kindle but you have so much competition in that area, it has been a very difficult year, bill lynch brought in to run that company, really focusing on the digital side of it. you know, we will see. i always come back to liberty and malone and muff fay and that position they have in barnes & noble and what may transpire there. that's 17 -- roughly 17% ownership position they have. >> someone who has written some books, writers here, you know that barns and nobody is the keystone, trying to get in front of people. i don't think we lamented it
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enough. a secular temple of learning. i have spent any number of countless hours at barnes & noble. >> you spent countless hours but how much did you spend per hour? nothing? like nothing? that's the problem. if they charged a mission, they would probably make more money. >> they should. but libraries -- i love the library, too. library is another place they don't spend that much money in. >> don't have to buy a book there either, almost like a library, nicer with a starbucks inside. >> netflix for my movies, i don't buy the box sets anymore. apple should buy netflix, reiterate that again. >> you must say that once every other day. >> i'm trying to help them. >> amazon. 'cause amazon spending all the money that netflix -- why -- >> bob olsteen said netflix probably the most dangerous stock running today. amazon, there was great investors, peter lynch, ran the magellan furngd buy you what what you know. talk to younger people about
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apple zohn and netflix, there is no price they wouldn't pay. it is most loved of our time, more than itunes. >> girnt s & p limited, retail story conditions there is crm and gap tonight. jim, do you play along on this trade as it is happening? >> crm, along "mad money," i believe they he -- the stock is at the right level. red had upgraded today. low ball guidance, people get excited about it i think gap is doing terrifically well. i like murphy, stock acting terribly, mystify why that stock doesn't move. brought back a lot of stock. i'm believer in the long-term turn, not going to let the stock -- i could be wrong about that i would do it in calls, perhaps, mystified how poor lit stock act versus how i think the company is doing. just don't get it. but then again, groupon stock came in with a real head of steam into that quarter. >> that's true. just last week, upgraded by
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piper. talk about stepping out in front of a train. >> wow. >> timing was not regood. groupon shares down by 25%. losing a quarter of its market share, market cap, just single session here. yeah. >> incredible. a deal, right? a daily deal for you. >> see if anybody steps in and buys that is it like the brazilian wax of stocks here? >> manny/pedi groupon. a manny/pedi, get a groupon. >> best buy shares, the company will report earnings tomorrow, up another 1%. today is the deadline for richard schulze to make his -- or do something if, in fact, he chooses to do something. >> what do you do? >> ridge yo, schulze. >> do they refuse to face facts or not recognize value we can't see because they are vision stealers in. >> reports of him trying to make a larger minority investment, seems very odd to me.
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>> who? >> schulze. why would you do that? make the bid, try buy the company. the move up in the best buy from the 12 range to the 16, 17 range, as difficult as it was to imagine he would have been able to pull it off even at 12, much more so here. to imagine that there is a way to raise the necessary financing for a leverage buyout of this company, even with him rolling in all his equity. why you go down a minority investment road is not completely clear to me. i think for his, he gets two board seats, takes them, figure out a way to exercise a little bit more control on management if it's possible, while he tries safeguard his own fortune >> >> there is a place for best buy, i think, a place to go buy something. take your kid to college, believe me, still end up going to best buy. take a look at what this kid's got a radio. >> just go to walmart, you buy everything, including groceries, one stop. >> amazon.
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>> don't have to carry anything to college. >> you end up going to -- 24 hours, you take your kid to college, you go to the barns and noble, college book store. >> because you don't know your address yet. >> exactly. you don't know the roommate you what the room -- >> how big a tv do you need? depends how big your wall is david, you don't know that until you get your dorm. >> no tvs in dorm rooms. >> sure there are. oh, come on. >> by the way, probably are people are watching on their phone. >> watching our show. surprised the penetration our show has in college rooms. >> yes, i would be. i would be. >> he caesar castically. check in with bob pisani. >> hello, everybody. happy thursday. last day of the month, buck the trend again if s & p 500 up 1.3%. february is supposed to be the weak link in the best six months series, november to april, best six months, february, historically, statistically, a down month the last 50 year bus we are up so far, at least going
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in today. japan up huge. see it up 2.7% overnight. shinzo abe getting his guy, kuroda into the bank of japan, a lot more easing down the road, weak today here. people asking me will we hit a sustained bull market we hit new highs today or any zmat key thing here is the bears have had very good arguments here, sub 2% gd st. a problem for the stock market and anemic top line growth is a problem. however there are two things why the bulls have been right. number one, of course, mr. bernanke, he reiterated rates will stay low. if you focus on the economic data and recognize a lot of this weakness is government driven, i think you can make an argument that we are at least holding up here in the high range. i think that's very good point
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to make. let me move on to the retailers. the key point about the retailers is the string of cautious guidance that we've given it. so look today, we have got kohl's below expectationses on 2013. limit bead low expectation. joining home depot, abercrombie, nordstrom, dollar tree just off tonight of my head. all those guys guided below expectation, i think is that little bit concerning, housing, despite the fact retailers seem uncomfortable retailers are going to be able to keep spending, a key concern for the economy. by the way, jc penney reopened, just down 17%, right behind me. their loss is going to be a real problem for retailer earnings and the s & p 500 earnings. 11.7% gain for retailers on their profits so far, put in jc penney, only 8% gain and some concerns as well for the s & p 500. i will get that you number later. guys, back to you. >> thank you, bob. important to point out, bob was mentioning, industrials joining global again.
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this is a story where mike souther land is calling you the bottom. you may think it is jerry valet. >> as opposed to a carnival let. >> some ex-stent, watching treasuries is like kissing a cousin, yes, we see movement, stocks go up, pushing yields up, the link badge on every couple of days or couple of weeks gets delinked back at different levels. case in point, what happened to italy and the postelections. we linked back from the 180s versus 2%. look at an intraday 10, intraday 30. slight reaction, hardly noticeable after the 830.
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big drop in claims is big news, doesn't give us huge clues, the whole point of the exercise. the euro versus the dollar. year-to-date, definitely see the left side, right side or somewhat in balance. this is perceived to be support. the low on this trade around 13020 on the 26. now look at the euro versus the yen, the two-day chart is insightful. see yesterday, it traded below a very key level, 120. interday, 119 and a quarter. you open the chart up, based on closes. on this chart, clearly see, technicians used close only charts, holding the 120. now let's look at a two-day versus the pound dollar. it has been moving higher but wow, you really want to get perspective on this trade, tough go back to july 2010. barely a bounce. jim, back to you. >> thank you, rick. lots of news about natural gas in the papers today.
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check out the latest news in energy and the metals. bertha coombs and the nymex. bertha? >> natural gas has certainly been an outperformer the last three days. flaps ahead of the weekly inventories, expectation is a with drawl of 166 to about 180 billion cubic feet, according to a number of analysts. although in terms of demand, we are entering that slack season. we are also seeing temperatures for the beginning of march looking a little bit warmer. as far as the energy benchmarks, we are coming off an inventory number, a little bit better than expected oil billed stronger than expected, draw down in gasoline better than expected. oil prices these days disconnected from a run-up in the market. we have seen gasoline, up 6% year-to-date, taking a look at wti and nymex, we are on track for a down month and prices for wti flat for a year. back to you. >> thank you, bertha coombs. breaking news on midwest
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we got up 1.2, 56.8, an 11-month high, all in all, a very solid report, rick. we have back-to-back monthly gains in the barometer. not seen that in two years. also, the three-month moving average on the barometer is up for the second month in a row. we have not seen that in several months. the three-month moving average has been going down consistently. also, big point here, the star was new orders, it was up -- new orders with up 2.0 to 60.2. that's also an 11-month high the big deal here is that since
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november, the new orders have been up 14.8. the good news here is that newed orrers is running on pace with production. they are running right neck in neck. and the deal is that if your new orders are strong next month, you are going to have to increase your production and that means you are going to have to employ people. >> so far, so good. what about the employment index, the most important to me? since i have the survey now, i can see down 2.3. down at 55.7, still 5.7 above the expansion/contraction line, a little disappointing. >> only slightly disappointing, rick, you have to take it in the context of the gain we had last month, up 11.2. >> january 23rd, almost out of time. we had benchmark revisions, the last quarter of last year had reads under 50. those have disappeared. so you know, makes me a little nervous about the benchmark revisions, all said, a solid report, correct? >> all said, solid report. >> back to you. >> thanks very much, mr.
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santelli. did want to do an update on a story we talked about this week, cwh, commonwealth, take a look, shares the last three trading days, actually include today that is quite something. the activist from core investigation and partnership with the real estate giant related filed a 13.d owning 9% of the company. but everything has been in rapid order here, perhaps much more rapidly than your typical activist campaign, because the two wanted to try to stop commonwealth from doing a huge equity offering that would obviously disdi lutz their 9.8% position in addition that of other holders. surprise to some, tried to enjoy it, a flurry of press releases, offered 25 for the company, offer 27 for the company. we believe the underlying vasset, $40 for per share of this reit.
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need to you terminate the plan to raise equity you can $19 million a share is what they did wall street loves these reits, issue all the time, jim, many of the firms need to increase their assets. it is a nice sort of gravy train for wall street as well. this is far from over, the sense that i have at this point. you could probably expect that again and the way this moved so rapidly this loo will speed up yet again with related and core investigation as soon as today, saying perhaps we will come after you and your board. we have the opportunity to act by written consent, if we get more than two-thirds of the shareholders to agree with us, to replace the entire board. look for that one wonders whether down the road or almost immediately do a tend we are that solicitation, replace the entire board. shareholder baseself, jim, probably changed completely the last three days.
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>> congratulate, the stock hit 19, you said, look, i think this is pretty amazing, stock shot to 26 later in the day great opportunity watching the show. dave stlirkd sounds like a real-life poison pill, they basically enacted their own poison pill. right? >> had an actual poison pill at 10%, went to 98. do a huge equity offering. company using the proceeds to pay debt. able to make those decision and they have made their choices. there may be other things they can do as well down the road. but? -- but stathis is an interesti battle. one of the biggs and best. >> amazing that they did this. talk about what david einhorn should be after. this is the kind of outrage that i see. >> right. rather than giving us reason 11 of how apple should return its cash. >> up 6,000%, apple. these guys -- what were they
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down in two days? fine. fine. >> we haven't talked about apple at all today. >> .2 of a percent. >> the tape yesterday to watch it down $4. >> in a day where it was really hard pressed to find anything else down. >> yes, exactly. >> trim inverted x-ray banks shortage things that i know you use all the time. >> always. speaking of which, jim, the setup today is sort of the one you like to see rather than a strong -- >> go up immediately it can percolate. absolutely right, carl. i just think that what happens is this is what needs to -- we need to do stair step this should be one of those -- a step and then we consolidate. that let's people catch their breath and i liked all the data. that was fantastic. >> yeah. new orders, 11-month highs, back-to-back gains the first time in three years. >> people hiring soon. >> go behind what is driving us higher in this march higher
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toward record highs and it's an interesting sort of mix because you have the staples stocks, a whisper away from all-time highs, today's session, hormel, campbell, smucker's, new record nice today's session. again, the bunker trade, if you're going to buy spam, jelly and spices. >> bleach. >> soup. >> that's trade. >> carl icahn, walked away from clorox, hall val out 70, here is the stock at $84.73. icahn was right. >> incredible. when we come back, speaking of hot valuations is twitter really worth $10 billion? coming up, a debate over the social media firm's valuation. but first -- >> coming up, jim cramer's on fire. well, not literally. but his six stocks in 60 second he is are super hot. feel the heat when squawk on the street returns.
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he thinks this is one of the grateful markets, the veteran, 20% upside. see exactly what he has to say. check where we are with patient jc penney under ron johnson and check the pulse also of groupon, which appears to get weaker by the day. back to you. >> see you soon, simon. six in 60, you will have can materials, start with jim r 5,000? >> not -- divided by whatever. >> a big gainer on the day. it would be huge. probably one of the best. vulcan is -- goldman says like martin marietta. keep in mind, these are housing place, gravel, i like vulcan. >> ubs on whiting. >> a lot of the oil companies spending money bring run the oil. ubs didn't like it. i feel the opposite. i know is a bad chart, i like this money. >> barically, regeneron. >> the drug you inject it in
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your eye macular degeneration. and anti-cholesterol drug. >> a buy on that and red hat? >> tonight i have salesforce.com and point this out, jim whitehurst used to be at delta, a great job, used to be under the weather. i like red hat. >> glaxo hold to sell on morgan stan sflinchts no growth and i think no growth far ma has to be avoided even though you had a good yield. >> dpz? >> i have patti doyle on today, initiate dividend, blow away numbers, do everything right. this is yuck be in stocks, this is how you make money. like the pizza, which i do very much, i love the delivery, i love the app, buy the stock. >> recipe change was a good thing. >> wasn't it good? have you ever tried it with no cheese? >> no. >> try the no-cheese option, like tomato pie. >> okay. all right. what's coming up tonight? >> okay, we have got patti doyle, don't know what it is tonight but i like t and then, look, this is -- i call it popeye's, cheryl batch hardly. did you know that pat doyle and
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joe number one and number two in this period? i love the craw phish they have, some people call it crawfish. >> a show, jim. >> thank you very much. >> tonight at 6 and 11. see you later. the dow as we said, within striking distance of the all-time high. laz blow lowe ber reinny says the market has room to run. he is next. shares of dupe group reason down big. account stock ever get back to that $20 ipo price? (announcer) scottrade knows our clients trade and invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time. plus, my local scottrade office is there to help. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. voted "best investment services company."
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welcome back to "squawk on the street." get the road map the next hour. start with the markets. the dow could make history today. so long washington gridlock, arrivederci italian elections, stocks closer to record highs, laszlo but reinny and his take.
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the dow within striking distance hitting all-time highs despite fierce out of washington and skepticism from the street. laszlo birinyi joins us. great to see you. >> thank you. >> you have been a proponent of the notion that the dow and the markets, in general, will hit new high also but we are going to see them in an irregular sort of pattern what does that mean? >> days like earlier this week and might even have a correction but i don't try to call it corrections. my view driving from new york to los angeles ask me when we are going to get there. take it one step at a time, everything is all go now. >> what do you make of what has driven us higher? look at the sock tors that reached new record highs in the markets overall, names like the defense stocks, health care, consumer staples, do these say
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this is a robust growth-driven sort of market rally or is this a rally built on the flight to sort of safer defensive sector? >> i think it's a stock market rally, where people are looking at stocks. let me give you one stock i think incapsulates everything, berkshire hathaway. berkshire hathaway is 15% this year. that tells me that it's not just the retail investor, not sure covering, not high frequency trading, real buyers buying real stocks and i always thought to do better on the bottom's up than top down. i want to lock at stocks, wherever they are. >> you have two charts you want to look at from the past that illustrate that this is a major bull market. could you just talk us through what you are saying here? >> no better guide to the market they market, than history, we compare this to five other protracted bull markets. right now, a very interesting point relative to these other
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two. not suggesting there are going to be par his, saying don't close door the on this idea. step away, keep your options open. the market, at this point, previous times, has very good news, we talked all about the bad things that could happen. >> to be clear, 20% upside, mirrors 1982 or 1990, in your view? >> yes. >> wasn't the world a very different place then. if you go back to the early '80s, solomon brothers, second bull run, founding your own company, wasn't the stock market, as dallas fed president dallas fisher said last night, company fundamentals were now, as he said last night, it's dosed up on monetary dollops of ritalin? >> historical past, the market has worked very well for us the last three years. while there's going to be differences, different stock
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names, different drivers, again, you look at the psychology historical mom. s -- >> one of the traders side me a moment ago as i was waiting to come on the market, rally, i said what do you think? reaching these levels. >> we had no high frequency trading, we had liquidity. a lot of ideas about this market, we say things. for example, one of the things we do is in-depth studies, did a study a few years ago on volume. volume means nothing, right? not an indicator, volume tells you, active, doesn't tell you what they are going to do
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tomorrow. did another study later on in the vix what we found was sometimes the vix goes up, the market goes up, sometimes down. we have so many ideas we have, if you push back, be a little sin knackal, do a little rigorous analysis, find out, yeah it happened then. >> what is an idea that holds up over time? >> sentiment is a very critical idea. right now, seen at least five newspapers articles the last week and a half 3e78 are negative and some of the fact these use are wrong. >> no. oh, come on. >> an article in the journal, massacre of 1994, the fed raised rates. the stock market went down 9%, no, it didn't, went down 3.8%. a lot of things articulated individuals who really haven't done that much. >> that chart you showed us of the previous market and our
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current market, level of confidence those converge or die verge directionally is going which way? >> i have said 50/55% chance of hitting 1600 this year. i am lomgt december 160 s & p calls, just a little bit. >> still not going out on a limb on this, right? basically almost even, right? >> things go long. you take it step-by-step and the idea, where we going to be december 31st? i have no idea. again, i want to get to cleveland before i worry about los angeles. >> all right. so on the road to los angeles, which sectors are going to bring us higher at this point? >> industrials, the cyclicals, light on the defensive stocks, like the consumer staples,
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utility, so on, so forth. the cyclical and manufacturing, the economy turns back. i think the economy looks better from the bottoms up basis than the top down basis. >> as long as you say when we get to los angeles we don't have to come back to new york. these all i care b >> one-way ticket, lass low. what we're looking for. >> we learn how to swim and keep going west. lass low, thanks. dow theorists are rejoicing, dow transport an all-time high a few months ago s thissed toer to move us higher? jim paulson with wells capital management joins us as well. jim, good morning to you. >> good morning, carl. >> some of these internals pretty interesting. dow theory good. some say copper doesn't. what's your thinking right now? >> i think it's a good sign that we are -- dow transport going to a new high, i think we will see more of that hopefully in the
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next few weeks. i think the biggest thing that hits me this morning, carl, so much thought this is just a sugar high, liquidity drip from the fed, i think this is a fundamentally driven advance in the stock market, the last year in particular. so much more of this economy is now working that wasn't working. employment rate's coming down, job creation rights rising are, bank rates rising, housing activities going up,s home prices rising, the united states economy has gear it had and so that's why the stock market's advancing to new highs, i think. i think the thing people are missing. isn't some casual thing that is going to end. i think it is a fundamentally driven advance r >> given what the minutes said a few days ago. wouldn't this week look a lot different if bernanke said on the hill this week, you know what we actually are thinking about tapering off, a very active discussion and we are -- we think we know how we are gonna do it? with would we be looking at anything close to new highs? >> i think personally, carl, i
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think that i would like to see the fed start to normalize policy. i think the market, maybe not on the day they announce it, do better than you think. what would be the same you carl, the reports that came out, claim numbers down, housing activity up. manufacturing reports better, those reports that continue to trail out trumps whatever the fed speak is, i think. i think that's the message today is that we have got fiscal cliffs, we have got fed speak but also an undertow of economic information, getting better here in china, in japan, calming down in europe, that's what's driving this market higher. >> you believe calming down in europe is the appropriate way to characterize what has happened the past, say you 72 hours? >> yeah.
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the bond yields are better than six or nine months ago. >> mario draghi of the european central bank said things are poor enough to keep stimulating and possibly cut interest rates again. it is a dplash y'all pace of recovery, sequester may hit us, we will hang on in there with our monetary stimulus. you can't have it both ways. we saw how sensitive the market was last week. sure lit idea about central bank. >> i disagree with, that the day of the announcement, the headline day i grant you the traders are going to react to that, simon and take the stocks down. the fundamentals ultimately are trumping the fed. if the fundamentals weaken, i
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think all bets are off and the market could weaken as well. the fed speak is just not going to be as important. this is not a sugar high, manship. a four-year fundamental improvement from where we were four years ago. >> jim, thanks so much, good to talk to you again. jim paulson joining us from seattle this time. the second consecutive session, the dow hitting a fresh five-year high and in keeping with that market momentum, let's send it over to josh lipton for a quick market flash. >> hey there simon. history suggests a good year for the bulls, with a few hours to go in february, we are on track to post positive gains in the s and p 500 for both january and february. in a recent note, sam stovall of standard & poor's said this happened 26 times since 1945. in all 26 instances, or 100% of the time, stovall says that the s & p went on to record a positive calendar year total
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return, averaging in advance, including dividends, of 24% and mallsing full-year results in the single digits just twice, 1987 and 2011. the reason, investors, like an ok ok octagenarian willing to skip a nap, believe there may be too much. another question on our radar this morning, why doesn't the market seem to care about tomorrow's automatic government spending cuts that kick in the sequester? our chief washington correspondent, john harwood, joins us now from d.c. do you have the answer to that john? >> think two answers, simon. one is that there's so many good things going on in the economy, i just heard the previous guests say it was about fundamentals in the economy, not a sugar high. that provides some protection from whatever headwinds come from sequestration. the other side of that is
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republicans in congress, maybe few democrats, believe that southwester is not necessarily going to have the impact that the white house has been warning against. here's paul ryan, the republican chairman of the house budget committee, had to say on squawk this morning. >> believe that the government, which spending 3.5 trillion this year can do with $85 billion less, yes. do we believe that a government that spends more than $100 balance year in improper payments, money that shouldn't be spent can go after waste and inefficiency without raising taxes? yes, we believe in that. >> that said, both democrats and republicans would like to see cuts made in a different wake the prospect is, if you look at the calendar, we play is ale are rolling discussion that could build toward action at ate lary point. march 1st state the squers takes effect. march 27th is went government would run out of money under the current law, have to pass a new one to prevent a government shutdown. if there were a government shutdown, would you have a
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crescendo of negotiate eggs and something that would pro-views duce a new funding bill, perhaps replace the quester. if that doesn't work, look even beyond march 27th to midmay, which is when the debt limit is going to run out under the terms that congress agreed to earlier this year. so, there's the prospect that if it's not settled by tomorrow, which it appears unlikely, it could get settled by march 27th and if not, going to keep talking about this and it's going to be a function, simon, of whether public pressure grows to an extent that it forces the two sides to get together, overcome their disagreements. >> worth bearing in mind the nbc poll that you were talking about yesterday, the majority of americans, 52%, want the sequester or they want even greater spending cuts. now the majority of americans on that poll want the cuts, john.
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>> that is the sign of the argument obama wants to press. when go beyond the general idea of cutting spending and talk about the specifics, that's where it gets difficult. if you talk about cutting spending on, say, medicare or social security, the public says overwhelmingly, absolutely, don't do that. that's why the sequester cut don't affect the programs in a significant way. looking at law enforcement, border enenforcement, health care, education, there you have the possibility that the public is going too see impacts from the sequester cuts, layoffs and ultimately squawk in a way, maybe not medicare social security level but enough to make congress change. >> fly xbrifrs the military as we now learned. john, thank you vet. john harwood in washington. jc penney seek the biggest sales drop since ron johnson announced that transformation plan 13 months ago.
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shares down 21%. we have an analyst who has a buy rating on the stock. what's behind his call? that's coming up next. before we go to break, fortune is out with its list of the top 50 most admired companies in 2012. before we unveil the top five a little bit later on, these are some of the winners from back in '03. number five, ge, number four, dell. number three, berkshire hathaway. southwest airlines and number one, walmart. [ indistinct sho] ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪
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high it hit on october 9, 2007. that day jc penney closed at 67.02. today, shares of the retailer are far from that level and falling badly. jc penny reported last night that sales are down 28% for its fourth quarter and yet, we have an analyst with a buy rating on the stock. brian neagle joins us, senior equity research analyst at oppenheimer and co. good morning, brian. >> good morning. >> so you're prepared to step in front of this or advise people too do so? >> well, look i have an outperform rating here. my call on jc penney, behind all this noise, and there's a lot of noise out there right now, i think there are actually signs this turn around is beginning to work. i think over the longer term, a more profitable, higher return on capital jc penney will emerge. the near term is very difficult to call. i write a lot about this to our clients this is a sentiment-driven story.
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frankly, i agree with the market right now. a lot of reasons not buy jc penney. >> sharpest drop in sales since announcing transformation 13 months ago, three brokerages cut their price targets today partly because there is 1,000 basis point dees klein in gross margin on the quarter, as they desperately discounted to get rid of the stock that nobody wants to buy. >> yeah, so i look at that look, i think -- that's why i talked about the noise of these numbers, no question, jc penney struggled significantly lately, you luke at that did a negative 31.7% comp in the third quarter. like you said, 1,000 basis point decline in gross margins, a lot of that reflect the he have fors of jc penney to get rid of old product in order to make room for new product. so, when i think about, yes, very reflective of the ongoing struggles at jc penney but doesn't tell me much about what is the klain likely to look at, what is the ultimate profit
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potential with the company? >> brian, how long-term is long term? if you look at jc penney, for instance, the billion dollar in cash that they had targeted, they missed that target, but on top of missing that target they also moved payables, about $85 million worth into the current quarter from the fourth quarter. so, there's sort of shifting things i around to make the cash look a little bit better, so, when you say it's a long-term story, how much longer do we have because there are some concerns that perhaps this cash -- well, still there for now, but that there -- they are putting lipstick on a pig when it comes to their cash pile right now? >> i will address the cash piece first and talk about the duration of the call. the end of the year, 930 million, i consider that to be about 850 million, given that $85 million shift. but they also have a $1.9 billion line of credit. i think jc penney at this point has plenty of lick quoted sort of say take care of the cap x needed for this year.
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liquidity is fine t will be close but it will be fine. i think we will start to get more positive data points, midway through 2013, a larger number of the stores remodeled, but as i look further out, i don't see the company really turning a profit, at least on its income statement, until 2014 this is going to be a long-term turn around. initial positive data point bus a long time before we can say that jc penney finally turned. >> brian, even the things you say are true, doesn't his reversal in strategy or apparent drift in the nature of his strategy suggest that management has little to no cred bit? >> my comment today, i think they have lost a lot of credibility with investors, in large part because they went out with a very aggressive strategy and in a year's time, it changed that. i think that is a negative. also a positive, too. you said this company is learning. i look at, especially the promotional side, as recently as
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three or four quarters ago, ron johnson talking about a strict edlp strategy, shifted that now, talking about last night, one price a week. i think that's positive. really what is going to drive traffic into stores. i think the shifts are making for the better of the company. >> yeah. while people continue to lose money though. i mean, they are learning people out of a quarter of their wealth. >> yeah. look, the stock price today, down 2021%, very much reflect the near-term type concerns. i don't think jc penney getting much credit in the marketplace forth longer term potential in the turn around. >> a brave call, brian. thank you for coming on on a difficult day to make it again to repeat it thank you very much. brian neagle. >> thanks for having me, i appreciate it. >> jc penney. retail space, get back to josh lipton for a market flash. >> barnes & noble in the green, enjoying a pop here. the company reported a net loss for the holiday quarter impacted by decline in its nook delays can vise and e-books business.
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lower sales book stores. but also have headlines dropping from the conference call, barnses and noble confirming discussions between leonard ridge yoerks the founder and strategic committee of the board. ridge yo said he would like to buy back the company. also the ceo saying they are taking steps to significantly reduce their costs and overhead in the digital consumer business to operate the nook media business at a positive ebidta. you can see barns and nobody.popping about 2.6% right now. back to you guys. >> all right, thank you, josh lipton. is twitter really worth $10 billion? we have got a straight streit fight over the social media giant's valuation, one that you will not want to miss. keeping with the rally that just won't quit, look at the dow map as we head to break. ♪
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be deputy chairman, co-chair of the corporate department, joins us here at post nine. a trend or a one off, a successful banker who had been a lawyer going back to the law? >> what i want to be, david is a very successful leader, an opportunity to lead the oldest and one of the most important law firms in the united states, cad wall ladder, wicker sham and taft. we intend to take it to the center of business and law and regulatory matters. you know, because what you're reporting on, we are in a hinted regulatory phase in this country. and nobody a law firm that has the kind of regulatory power and muscle that cad walder has.
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i did this very intentionally. i love jpmorgan, the people are fantastic, they will be very successful. but i did this intentionally because this is where the puck is headed. i know what clients want what they want is one solution. they want a law firm that can give them this kind of solution. tell me about the deal and how we can get it done what. issues r that's really why i have done this. it is a leadership role, you don't get more blue chip than that >> making a bet on the fact there are going to be more regulatory concerns around business in general and dealmaking not just this year or next year. >> we are building a regulatory infrastructure. since the crisis regulatory matters moved up the food chain in terms of their importance to
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business people. what people want is somebody who understands business but understands the regulators and can put together together a combined solution. that's what business leaders need, top of their list, what happened cadwalader will do, what we will be about. >> i want to, just for a second, get bertha cools at the nymex, natural gas inventories. >> david, saw a drawdown of the 171 billion cubic feet, that was a bit ahead of the expectation for the drawdown. leaves us with total storage of 2.23 temp cubic feet. that puts us below the five-year average. we continue to move below the five-year average, seeing more demand for natural gas for heating in the past couple of weeks with that awful snowstorm in the midwest and the cold on the east coast. big draw down on the east coast, 109 cubic feet the draw down. we have nat gas, having rallied into the number now, more or less stable on the day.
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back over to you. >> thanks very much, bertha coombs. regulatory, why not stay at jpmorgan, help them navigate this increase the presence there with your dealmaking and garner even a bigger market share? >> i will continue to be a dealmaker, of course. as i said, the jpmorgan experience, working with jamie dimon, jimmy lee, doug bronstein, these guys are the best in the business, but my focus is taking the leadership role, drive the strategy of the entire enterprise, what i will do at cadwalader. it is clearly about leadership, trying to drive the organization forward and take the organization where clients r >> talk about deal making in and of itself. you advised a special committee from your perch at jpmorgan, advising still, i think, on the dell deal from cadwalader. is this deal gonna get done at 1365? >> i think the deal will be very successful but have to defer to jpmorgan. i'm representing jpmorgan and
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jpmorgan needs to be the lead spokesperson on dell. but i'm going to be working on the matter and we are going to be working hard and look, listening to shareholders and so forth, but 1365 is good. >> to the extent you were on -- advising that special committee during this -- you were one of the -- helped architect this deal. this special committee seemed to go through a great deal of effort to get silver lake to the price it achieved. i just would love to get a little background to you in terms of the sense is there much left on the table? >> this is one of the best processes ever conducted. i think when you see the process that this special committee went through, they turned over every rock they looked at every opportunity. beyond that i am going to defer to jpmorgan. >> talk about m and a overall. dell using cash it has overseas to help fund the buyout itself.
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a lot of companies under pressure to use the cash, care about apple. nobody will take out of apple is that more of a factor in activism? put it together for me. >> what the activists look at, not just the activists, david, it's the sponsors as well. they are going to look at a opportunities to bring cash took facilitate transactions. one of the things we are gonna see is an increase in lb activity, for sure, due to the financing markets in general. the robust nature of the some prices and the cash there the cash, as we've seen, can be a vehicle to unlock value in the context. >> paying taxes ton by repatriatin repatriating? >> structures available, again, very specific to the company, but structures and opportunities which allow companies in certain circumstances to access that cash and make it available to get shareholders a control premium. i think that is definitely going to be part of the mix. >> getting a little carry aid
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way thinking there is going to be a wave of $20 billion lbos? dell a specific situation, odd chairman willing to roll in an awful lot of his stock. >> yeah look, the lbo increase we are going to see is not going to be about $25 billion deals. that transaction is idiosyncratic. what this is about before this transaction, we had done a lot of $9 billion deal he is. hadn't done a lot of $10 billion deals. this is about the 9, the 10, the 11, the 12. that's where the action is gonna be, where the action is you will see more transactions kind of ranging from call it 5 billion both 15 billion that will be a sweet spot, see more activity and by the way you shareholders want it. shareholders want the transactions to happen. >> jim woolery, as always, appreciate your time. good luck in the new gig. >> thank you, david. look forward to talking to you and continue the dialogue. >> jim wool rick, cadwalader, no longer jpmorgan >>. the dow shy of its all-time
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record, we sit down with art passion next for his take on what has been a phenomenal rally. plus, the dow may be closing in on its all-time high but the s and p 500 index still 50 points away. and the nasdaq, not even close. we will take a lacks, importantly, at the technicals in the next part of the program and how that could affect where you should put your money next. [ whirring ] [ creaking ] [ male announcer ] trophies and awards lift you up. but they can also hold you back. unless you ask, what's next? [ zapping ] [ clang ] this is the next level of performance. the next level of innovation. the next rx. the f sport. this is the pursuit of perfection. how do traders using technical analysis streamline their process? at fidelity, we do it by merging two tools into one. combining your customized charts
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dow in negative territory, a fresh five-year high. the heat map, a sea of green across the board. we are watch, a number of notable indices hitting record highs, transports for one. new all-time high in today's session. dow sitting about 100 points away from its all-time high and looming budget cuts a few hours away you is the rally that won't stop in jeopardy? ubs's direct over floor trading, art carbon, joins us here at post nine. talking about what a plethora of topics we have had to talk about this week. not able to hold 14,000 though for more than a day or two. >> a day at a time. day at a time. it's amazing. i think what the viewers should know most importantly is that the old phrase about a self-fulfilling prophecy this was a self-liquidating concept. everybody and their sibling were waiting to buy the dip. and we got that selloff and they said, oh this is the beginning. getting really it ready for it
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the dip began to disappear, everybody had to rush in. my god, my dip is going. the train was leaving the station. i don't note technical term for it but psychologists tell us is a natural function in humans, see a car backing into a space, people tend to dart behind it because that space is closing, doors are closing, people tend to run toward closing opportunities. >> we end up flat for the week, where does that leave us? >> puzzled. i think there are some technical signs that look like you might be developing a slightly broadening top here. at the same time, the bulls can make the case, we are just resting up. so, with the idea that the dip is no longer available, markets will have to take things on their own. sequestration seems to be a non-event. everybody probably is focusing on march 27th and the continuing resolution. italy would be a far more interesting story but it seems
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to be moving in slow motion. you know, the feeling was that if the election had taken place later or if you had another quick election, as you did in greece but couldn't hear, that would be my -- sweep the table, take everything in. that is going to make berlusconi and bersani figure out what their strategy will be. >> in terms of sequestration, art, may not be a big thing act, least immediately, but the long they are is prolonged, isn't it more of a headwind? i think the consensus -- seems the consensus in the market, sequestration will, in fact, kick in but congress will reach some sort of a deal to eventually retroactively peel back that sequestration in a short amount of time. but as the days go by and weeks go by you isn't that more of a headwind for the market? >> certainly will be. particularly because this sequestration a blunt instrument. they are taking away children's vaccine on the one end and leaving car fare to go to conventions on the other. >> or syrian rebel aid. what an odd week to mention
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that. >> for sure. things don't look like they are going in the right places. as i said before, made it sound so dire, almost wish the asteroid had him. things would be different. we will see. >> just before we let you go, art, can i take back to the beginning of where you started and painted this ral slick, a rally based on institutional money, retail money, real money n your view thursday is not driven higher by computes? >> the computers certainly participated, everybody uses that vehicle now. >> program traits? >> program trading, there is so many algorithms running in here, the programs also know that the other players have been waiting to buy the dip. when they see the dip closing that is kind of front running on their behalf, let get in there these guys are going to have to chase them starks heavy component but a lot of it is psychological and we will see what happened now that we've eliminated the dip. >> let us know when mainstream media starts calling in ernest
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so we can -- our favorite contrarian end care the, thanks, art. >> the big breakout is quite bullish but too much of an outlier here? the broader industries a ways away from their all-time highs, talk the technicals on the breakout move and what it may mean next. take a look at this fortune magazines naming names with the list of the top 50 most admired companies, the top five here, number five, starbucks, number four, coca-cola, three is amazon, number two is google and number one will be revealed right after this. ♪ [ male announcer ] to hold a patent that has changed the modern world... would define you as an innovator. to hold more than one patent of this caliber... would define you as a true leader.
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promised before the break we would unrate is number one most admired company, four of the five, starbucks, coke, amazon, google, number one, of course, apple. despite everything that happened to their stock over the past couple of months, melissa. as we mentioned, the s and p and the dow their all-time high
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from october 2007, but something funny happened on the way to the rally, the s and p 500 is far away from its all-time high in '07, the dow is within striking distance. time to take a look at the technicals here, mark muteson the chief technician for gray wolf execution partners. discussing this note i came across this morning put out, signaling the fact that over the past 15 trading sessions, the dow has made higher highs, made the steady march higher toward its record high from october 9, 2007, but the s & p 500, the nasdaq and the russell have made lower highs. >> yes. >> which technically speaking i would imagine is not a good sign. >> still a little bit of a concern. you luke it the dow yesterday made highs, the nasdaq and s & p did not. dow 14,000 but dow is under its 2007 highs of 14,200 and also the russell 1,000 and 39,000, not participated as well. all up against levels of high some of these indices have broken out. continue to be a concern, in
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regards to what we call intermarket divergence, not all indices hitting the thighs same time. >> you are counting down to this record on the dow but it's a snapshot of 30 companies, not representatively of the broader markets in terms of the s & p 500 what are the levels you are watching? >> the last couple of days, the s & p has shown since of peaking out. my thinking is a short term is still a big issue. we could actually pull back to levels 1475 regards to s and cash, 1450 regards to the future, leffs on the downside. those would still be withined broader uptrend since november a selloff would provide a better buying opportunity in short run, the down side the upside, 1525 to 30 is very important. the s & p above 1530, likely to challenge its own 2007 highs, near 1576. >> let's be clear here, short term, maybe concern about thesome and p 500, but longer term, do you like this price
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action? >> that's correct. mostly just short-term concerns only. a lot in regards to momentum deterioration, last week, broke down in serious volume and bredth, more negative. regardless of this new don't fight the fed mentality, the rally yesterday did not help us to get back a lot of what's been done. you see this trend line the last month, really was broken last week. we have had a series of lower highs, now up near 1520. regards to s & p futures, a key level in the short term. momentum is negative on a short-term base circumstance u intermarket divergence, a huge run-up in sentiment the last couple of moments, to be expected. >> as measured by what? >> investors a intelligence, aeii, consensus you can market rain is. >> con tearian indicators, more bullish, the more likely you see the markets pull back. >> that's correct. they all follow price action. the s & p up 12% since last november's lows, as expected, sentiment gradually followed this move up to new high territory. now we have a number of different indices all near
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former highs, the u.s. is starting to play catch up with what's happening in europe. europe peaked in late january. saw china one of the biggest declines in the last few weeks. s & p showing signs of deterioration, not all the stocks are following this mark it's move to new highs, seen deterioration in technology and materials, those under constant pressure. >> transport, health care, staples hitting new highs. >> a good point, melissa. market up 7% this year but largely defensively lagged. consumer staple, health care, a big move in utility, the last week, by and large, a lot of the sectors have made their moves, like financials, up record highs. important to be selective at this stage. >> mark, thanks for coming by post nine. simon? >> yeah, melissa, next owned program, rick santelli has one of the most outspoken republicans in the house to talk about whether wall street should be paying more attention to d.c. more attention to d.c.
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and another contrarian call. we have an analyst well a buy rating. and as the dow takes aim at its all-time high, take a look at some of the dow winners that are pushing it back. tires squeal ]over, and you'll find advanced safety technology like an available heads-up display on the 2013 lexus gs. there's no going back.
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welcome back. i want to get to cablevision shares. the new york-based distributor of programming and broadbrand, numbers that were not really good, even when you take out the costs associated with hurricane sandy. but then the conference call began and it is there where people, frankly, who have been on the call and i have not been able to be on the call as a result of being on air, it's been scary for them that the call was not going well at all. the man who runs the company not entertaining a number of questions in terms of the suit against viacom that was begun a couple of days ago by cablevision, significant increases in programming costs, in overall expenses, and seeing pressure that is fairly significant pressure. in fact, in q1.
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what had been as much as 11% coming back a bit now, i wanted to update people again. not a great quarter to begin with. it seems to have exacerbated the fears for a very, very high-leveraged companies. that means it has a lot of debt. melissa? >> this has got to be one of the biggest drops for cablevision in a very long time. david, in the meantime, we want to call your attention to vatican city. pope benedict xvi stepping down after nearly eight years as pontiff after unexpectedly announcing his resignation on february 11th for health reasons. you can see him walking down the hall here. he's expected to depart vatican city by helicopter heading to castel gandolfo where he will take up temporary residence until his new residence outside of vatican city is complete.
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once he steps into the castel gandolfo, the doors will closed and it is complete. >> thousands of people stormed into st. peter's square to watch this happen. they put big screen televisions inside the vatican grounds for the public to watch what is happening. it's hard to get a vantage point of the scale if you've never been there but isn't that just an amazing thing to watch? >> and historic are, given that we haven't seen anything like this in 600 years, right? >> i wasn't there but obviously you were, david. eagerly checking the stocks. >> yes, i was. >> interesting this morning, cardinal dolan of new york was asked if he stands a good chance of taking his place. he said, about as good a chance as a-rod has.
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obviously something the entire world is watching as we keep our eye on vatican city. meantime, one day until the sequester and a day after chairman bernanke spoke to the house. i want to go to rick santelli in chicago. >> hello, carl. i want to welcome our guest, congressman jordan. welcome, congressman. >> thank you, rick. >> listen, i want to talk about three or four things and then cover the market. am i control that the budget control act was 2011? >> it was. >> i know bob woodward has been taking a bunch of green fans and seems like its was newly nominated jack looi treasury secretary. >> yeah. >> i've been looking at this in depth and it's not easy to do but i notice a section called 265, program exemptions. are you aware of that exemption? >> vaguely. i wasn't there when it passed but go ahead. >> i know the president has the
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bully pulpit and he is entitled but it certainly seems like the things he's talking about from child nutrition and educational programs and other entitlements that a lot of those seem to be exempt. am i wrong? >> they are exempt. he's trying to scare the american people. we're about toll achieve $85 billion in savings. that's a good thing. would i prefer not to hit national defense the way it does? certainly. we voted to change that portion of it. but the fact is, we're in debt and need to cut spending and achieve a cut in spending and the world is not going to end. the secretary of education was misleading the american people when he said teachers are getting pink slips because of the so-called sequester. it's not happening. it was proved not true and he's out there saying it. >> i read about that too, congressman. the sunday shows always seems to
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get a spin that doesn't hold up on monday. >> yep. >> let's go to the market. i'm a market guy. i'm at the cme group in chicago. you know, when we listen to ben bernanke yesterday, he made a comment that we may not reach 6, 6.5% of unemployment rate until 2016 and the market rallied. i don't know if i could look at the market to -- these traders just want to make money. how do you think market participants ought to look at the sequester? what are your thoughts and what do you think the market movement would mean to politicians in general? >> just what i said before. this is a good first step. the president wants to say, the world is going to end. this is only 2.4% of the entire federal budget. there have been all kinds of families and business owners that have had to sequester 2.4% of their budget. this is a good first step in starting to address the $16 trillion problem we have. my concern with the fed,
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frankly, is ben bernanke policies are financing barack obama's spending because the fed with a cheap federal dollar policy makes it so we're only spending money to service that huge debt this year where if interest rates -- think about this, rick. if interest rates were where they were before the crisis, back in 2007, we'd be spending about $800 billion in interest payments to service that kind of debt. that's what scares me more than anything. >> you're preaching to the choir. i understand some of the issues of solvency in europe might push rates down. final question, real quickly, yes or no, do you think there's going to be a last-minute deal like there was at the end of 2011 and 2012? >> no, not at all. if there's an attempt to do that, you will see me and a bunch of other conservatives going strongly against it. i don't think it's going to happen. i applaud them for do that.
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we have to have this happen. >> thanks, congressman, for being our guest. carl, it's all yours. >> talk to you in a few minutes. meantime, melissa, what is coming up tonight? >> tom lee, strategist at jpmorgan, turned bearish last week. what is he seeing that we're not seeing as we march to the record highs. and how to play the online gambling aps? we'll get the topics from the top analysts. >> see you guys tonight and you guys later on. if you're just joining "squawk on the street," here's what you missed. >> announcer: welcome to hour three of "squawk on the street." here's what's happening so far. >> from the financial side, we are in a positive position. where we do have a problem is the economy, growth rates that are not adequate still. >> we've been proposing this for years. the president is going around
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the country campaigning and not dealing with this. >> apple, by the way, did you see the release of a billion itunes content. why doesn't this get the stock out of the rut? there we go. >> you know what, jcpenney abandoned them. they don't know what to make of this new store. $4.3 billion in sales. that's how much was lost under johnson since they took over. that groupon call was like andrew mason. are you in touch with reality? he was saying it's hard to believe that just a year ago we were just a daily deals website. it's hard to believe that your stock is down 70% since its ipo price. >> what business people want is somebody who understands business but also understands the regulators and can put something together that's a combined solution.
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that's what business leaders need. >> good morning. we're live post 9 at the new york stock exchange. the market has been flirting with highs all week and all day long. s&p is flat at 1515. nasdaq hugging the flat line this morning. monster beverages well a high after reporting a 5% increase. revenues also up. pandora, meantime, down sharply after the company says it plans to cap the availability of free music be on mobile. we do want to go back to vatican city where the pope is now boarding a helicopter, which despite his honorary pilot's license, he will not pilot himself. let's take a look. let's just listen to this.
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and with that, after eight years, formal cardinal joseph
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rat ratzinger retires as pop. as we continue to see what the conclave will do as we search for his successor as the entire world watches what is happening with him. got some breaking news out of the new york fed. a hard right turn here to steve liesman. >> why does this always happen to me, carl? >> hard to follow the pope, my man. >> exactly. let me do my best. the new york fed reporting that total consumer indebtedness rising a scant 3% to 11.3 trillion. housing debt was flat. it was a small gain but the first gain we've seen since the first quarter of 2011, that was thought to be a bit of a statistical anomaly. so maybe this is the first real gain. let me show you what rose. auto loans up 15 billion. credit cards up 5 billion.
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the perennial student loans up 10 billion and they have been rising quite a bit. delinquencies are quite high. all delinquencies declined except for student loans and they were up almost 12% and probably because of a whole bunch of different reasons, carl, they could be twice as high as that. carl, back to you. >> steve, thanks for that. what a week you've had covering steve bernanke on the hill and now this. the dow striking all-time highs after touching the five-year high this morning. is nothing holding the market back and has the anticipated pullback come and gone already? michael is joining us here at post 9. a great column and tweet, if you were looking for a dip, was that it? >> obviously not enough to do anything with. it was a stutter step, i guess you would call it and i think it ushers in a two-way tape. and to me it seems like there's
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a little more corrective stuff that has to happen, whether it's to the downside or just chopping around. we didn't really reset expectations a lot lower in terms of that bullishness. hard to say from here but i do think we're kind of following the script from the prior two years. up 6% since valentine's day. up to a new high in april and then it was kind of like your year. >> right. >> so given what's changed and what really has reset vix, copper, some other commodities, what is the tell? what is the tell over the short to medium term? >> first of all, the treasury market hasn't really given you a green light. it remains stubbornly below 2%. didn't participate yesterday in the rally on the equity side and the credit sides are the underpinnings of everything. it's the junk bond etfs that are off their highs but still kind of sitting there and not giving you a real warning signal. all those things i think are in play in terms of your real tells
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and i do really think that the macro data -- i'm not surprised that the market is taking second questions can strags okay but sequestration. >> everything from richmond to cap ex, which is what a sort of new high thesis have are been built on. >> we're four years into a bull market. we've doubled. we're looking for factors that are going to length then this process. i think the fed is lengthening, drawing out the cycle. in the seventh inning but it's going to be a 12-inning game. >> what do you think about the bear's argument that divergence matters, whether it's russell to
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dow. copper is not helping, as i said earlier. >> they matter tactically at this point or at some point they will matter tactically. i don't know that they matter in terms of telling us something important about the trend, in terms of economic trajectory and all that stuff. but right now they absolutely matter. it's basically ben a big cap stock story. the dow leaving is something that people are leading to and usually that can mean that it's the index that is a little bit more susceptible to those little emotional moves. >> what do you think of this idea that you've got to get industrials and financials to lead. we can't continue to ride this train on the backs of smukers and hershey? >> i do buy that if it's smuker and hershey. you can't have the pure defense leading. i think we have an interesting market. the last time the s&p was at 1500, 200, 2007, you had these big embedded sector bets.
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you had tech and financial and housing in '07. right now seven out of ten sectors are 10% of market cap. it's okay if we trade the lead a little bit here between sectors but i do agree with you, you can't really have the pure defensive yield stocks leading the way if it's going to carry you something. >> my favorite tweet of yours in the past couple of weeks was the idea of old family money. this is after heinz. and you look back at the bancroft of heinz and wrigley's. >> in '07. >> itf the m & a thing takes of, it's got legs to carry it. it's not reasons to own the market but you should keep an eye out for it. >> always good seeing you, michael. >> thank you. >> as you know, shares of jcpenney are down 20% as the company reports a decline in traffic and drop of nearly 32%
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in sales for the fourth quarter. ceo and chief reare source officer and courtney reagan joining frus hq as well. courtney, the pile on began after the bell last night but what's important to know going into the rest of today? >> it did. i think as we look forward to today, you have to decide if you're an investor how you're looking at jcpenney. i don't think this is the play for you. this is a lodge-term strategy and the big questions remain about ron johnson sitting in the ceo position. 20 days ago he told us the board is still behind him every step of the way. but yesterday's results were a disaster. and what really stood out to me, traffic down 17% that. bothers me a lot for a fourth quarter. that's the holiday quarter. >> the traffic, the margins, conversion rates, the wet business. would you be willing to follow him into battle in another holiday? >> i think it's going to be
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tough going. yes, be he is getting more in-store shops there. you're going to have the home business retrofitted hopefully by the end of may. but share is gone. we saw the results from tjx yesterday. we saw the results from macy's. there's a lot of places where consumers are going and what it will require is a lot of investment spending on the marketing side to attract people back to the store. >> we've seen what they are doing with marketing. you look at the new ads, they have spared no expense. is there the cash there to work with? dana? >> they are talking about $3 billion of liquidity. in the near term, there is. traffic is continuing to wane and it's harder to bring that traffic back. >> courtney, you interviewed him two weeks ago, maybe three? >> it was. yeah. >> and he would not admit that he made any mistakes or do anything differently which was almost the polar opposite of what he said last night.
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>> yes. i said if you could do things over, would you make any changes? he said for the most part, no. he may have changed things tactically here and there but last night on the call he said, look, we made some mistakes and i take full responsibility for that which i think is is evidence to his return to sales. before yesterday it was an event-driven sales. now he says we're probably going to have to do a sale a week. >> yes, she does. as ron himself said. if you're looking at an ancillary play, where do you go? >> i think it's tjx and macy's. the word of 2013 coming out of earnings is integration. omnichannel, multichannel, that's where it's going to. >> guys, what a story it was last night and continues to be today.
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thanks so much. courtney reagan and dana. groupon plunging after the stock losing nearly 30%. up nearly 20% of the value. 80% since it went public. does this company have a chance at is survival? we'll talk to an analyst who still says buy. first, rick santelli is looking at the exchange for later on. >> i am. and you know what, carl, we have really top caliber people. today we had a very famous, very educated technician. yesterday we covered ben bernanke. but even the best and the brightest say things and sometimes i say, what did he just say? and that's what we're going to be covering in about ten minutes on the santelli exchange.
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. let's take a look at the dow transports. good news for the dow, looking for directional clarity, our josh lipman has more. hey, josh. >> carl, the dow transports hitting new all-time highs this morning. what has been driving that move? if you peak under the hood, it's four rail roads, one airline, and two freight and logistic companies, names like ups, dell tarks union pacific, and kansas city southern. carl, back to you. >> josh, thanks a lot. the dow hitting its all-time high. don't p tell groupon, though. weaker sales growth for the
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current quarter. i want to bring in arvin, research analyst. good morning to you. >> good morning, carl. >> a lot of discussion about strategically where these guys seem to want to go. that's an element of some confusion today? >> a lot of confusion. we recently upgraded the stock based on the production of this company. i think what we saw in last quarter was demand and acceleration which got lost in the noise of the quarter. they clearly missed the profit expectations but i think 25% increase in demand, to me that was a big positive. what we thought was going to happen here is q4 is going to be noisy. it will probably be the trough quarter for them and we'll see nice profit recovery from here as they go forward. they invested a lot in merchant
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quality. i think that's a good long-term strategy for them. i think we'll see some signs of a turn around internationally where they are cutting costs, making things more automated, essentially bringing some of the best practices internationally. it's a long-term turn around story. it might be painful in the near short term but long term we think it's a positive potential here. >> here's a note from one of your competitors. they say it seems the company is moving away from a technology platform for merchants and into an overstock retailer. when you say turnaround, are you saying that they are turning around within the same space or are they trying to migrate? >> well, there's several moving parts of this. what i'm referring to is internationally a lot of stuff is being done manually. there are a lot of salespeople and efficiency and profitability per salesperson is very low. what they have to do is take the u.s. playbook, as they call it,
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and take it to the international markets can, which is not just one market. europe is big, uk within that is a big market. they have to take a lot of the technology from the u.s. internationally and as they do that, international should start to turn a profit. it lost money for the second quarter in a row in the fourth quarter. it was profitable earlier but i think that changed to where its profitability is in the second quarter. >> trying to draw merchants in and participate, i assume you're sensing some hesitancy by merchants to play. is that also in the process of turning it around? >> i think their strategy is to upgrade the merchant quality. so in doing that they are going to find some merchants that haven't tried groupon who might be willing to try it. i think groupon's strategy is,
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let's give more merchants a try and some merchants that are maybe more national and with product that had more clout, that's where they are going which, again, long term is good strategy. >> finally, does it matter to you in term of your buy rating or your $9 target whether or not andrew mason runs this thing? >> well, look, i think as far as i'm concerned this company has, you know, a pretty good board. i think they will eventually find the right people if andrew is not the right guy. i think andrew issuing some signs here, again, i said demand acceleration was phenomenal. it's not necessarily an important part of my piece at this point. fundamentally i think the demand is there and profitability has to show up in the coming quarters. >> arvind, good to talk to you. thank you for coming on.
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ahead, is twitter really a $10 billion company? we're going to get to the bottom of what some are calling that valuation. the dow has been 10 or 15 points on either side of the flat line today as we continue to watch 14,164, that all-time high. back in a minute. revolutionizing an industry can be a tough act to follow, but at xerox we've embraced a new role. working behind the scenes to provide companies with services... like helping hr departments manage benefits and pensions
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as promised, let's get to the cme to rick santelli. hey, rick. >> i tell you, i love watching all of our programs. we have the smartest, coolest people on but sometimes they say some extraordinary things, at least in my opinion. i remember walking on to the cme floor two floors ago in the late '70s and i remember getting my
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first radio shack computer around 1981. they wouldn't let me bring it on the floor because computers were outlawed. as a technician, we did a lost things by hand for a long time but i always loved technicals. people look at traders' almanacs. that's one extreme. then the other extreme, lance has a great reputation as a technician. i think somewhere in the middle. i'd like to play some of the things that he said and address them as a technician. please play the tape. >> you might even have a correction but i don't try to call a correction. one of the arguments in terms of high-frequency trading is they provide liquidity. volume means nothing. volume is not an indicator. volume doesn't tell you what they are going to do tomorrow. we did another study later on with the vix and sometime when
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the vix goes up, the market goes up. sometimes it goes down. >> i tell you what, doi totally agree with him on the vix. i think it's a great contract that it has. option volatility, i'm not sure it's a leading indicator as much as a subtle follower. the real point is, he doesn't like volume. he doesn't think it's important. so many real technicians would disagree, especially when you pair it up with open interests. just look at big moves, tops and bottoms. usually you get a relationship between volume and open interest. as far as fht, boy do i disagree with that. you know what kind of e-mails i was getting, that in the last second of trading, hft was doing 25 puts and it's part of this equation. real quickly, anybody who doesn't believe that retracements are an integral part of predicting technicals,
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look up w.d. gann. he is definitely known for retracements and he did a big hospital stay and during his hospital stay, legend has it he used to let "wall street journal" know ahead of time what turns in the soybean market is coming. just one man's opinion. carl, back to you. >> i like it, rick. i like the pushback. rick santelli. as the dow inches closer to record levels, the bells are about to sound across europe. we'll get the details on this afternoon session when we come right back. otherworldly things. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away. ♪
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the head of the european central bank effectively indicating that it going to follow the feds and stay there as it it stands at the moment. you'll notice that we had a rally in europe so far today. we've added to those gains throughout the session. mario was in the city of mun nick. he said we need to start thinking about an exit. if anything, mario draghi said inflation is going down and significantly less than the target of 2%. he's hinting at an interest rate cut. the results, as we close out markets for europe, the stock is
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at 600 despite all of the problems that we've had with italy, it is gaining, as you can see, overall. for the month of february, yes, those top 50 blue chips are in negative territory because a lot of those are banks and they are worried about what might happen in italy but it's flat. now there is a problem obviously with italy and you see a flight to safety from the bond market into the core germany. you'll see a divergence in the yields between the italian bonds. you see the yields rising in italy. thank you very much. in germany, obviously there is still a great concern there. i want to mention one more thing, carl, and that s. i need to take to you switzerland and show you what looks like a very innocuous news conference. in fact it is not. if you work for a european bank
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here in the united states or if you are an american that is posted to europe working for an american bank, there will be caps on bonuses if they get this through. let me run you through exactly what they are saying. the cap will be able to par with the salary that the bank is offering you and the maximum bonus you can have is twice your salary and with that you have to have a big vote of shareholders. the finance minister will discuss it but if they get it through and the commission agrees, it will be incorporated into the new basel iii rules. your pay will be capped if you go to work in europe for anyone. carl, back to you. >> that is a big thanks for that, simon hobbs. let's get a check on commodities with bertha coombs. what a big week it's been.
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>> a big week in particular for natural gas. it was a bit more bullish, down 171 billion cubic feet. that puts the stockpiles for nat gas at about 12% deficit from where it was last year. still higher than the five-year average. it shows you the demand for natural gas with the strong winter that we've had. cold weather on the east coast and warm weather on the west coast. when you start looking at the oil can complex, though, it's a different story. we've seen a risk off or just kind of flattening. even as stocks move to new highs, you've got the crude bench marks down for the month. gasoline futures also under pressure and an interesting thing, as we consider the dow approaching all-time highs. gasoline prices at the pump since the peak, we are not near the all-time historic highs but we certainly are getting back towards those levels and we have
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seen prices up nearly 40 cents in the last month. gold, however, is the real dollar when it comes to commodities. on pace for it its fifth straight monthly decline. carl, that's a 16-year losing streak. it's the worst in 16 years. >> right. five month down since '97. thanks, bertha coombs. let's go to bob pisani with a look at what is moving heefr. for people who want to get this done, it's slow. >> yes, and there's something we haven't seen in a while. we got used to higher levels of volatility in the last week. now we're getting back to where it was in january and very large parts of february. let's take a look at the market leadership and it's very interesting. i know it doesn't sound like an exciting day but materials are up. consumer staples up in health care. this is why the market is so resilient. these are near new highs. consumer staples you would think
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we're not doing so well. but, no, they are near new highs. you get the strength all across the stock market. in terms of what is moving today, we've noted the transports hitting an historic high. look at this, this is the year to date. here's the dow industrial and dow transports. look at this huge outperformance. transports are up 13%. dow up 7%. it's twice as much. for those of you who believe a leading indicator for the global economy, there is a good argument. downside leader, bertha was talking about gold. it's not just gold, it's gold stocks. they have been a horrible mess. ever since gold topped out. that was october. here's gold stocks and here's gold. you see this dramatic underperformance. it's not the same thing as owning gold. bottom line is, there are problems with the gold industry including problems in south africa. that's why you are getting this big underperformance. everyone is talking about out of
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bonds and into stocks. it's not happening yet. take a look at it here. these are the big bond etfs. so far in the month of january, they were weak in february. all of the bond etfs, high-yield groups are all to the upside and if you look at the money flows, these are index, take a look at the numbers year to date. there is money going into stock mutual funds as well as etfs. 70 billion but money is continuing to go into bond funds as well. 48 billion. that's a nice number but there's no evidence that massive amounts of money are coming out of bobd funds yet. no great rotation as of -- >> yeah. >> certainly mr. bernanke calmed things down with his testimony this week. >> that's true. thanks, bob. bob pisani. chrysler making a jobs and investment announcement at its transmission plant in indiaen na. our phil lebeau is live there
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with details. good morning, phil. >> reporter: good morning, carl. this is a bit of a routine for the chrysler ceo. over my shoulder you see him sitting on the stage as they announce an expansion here at the facilities in and around kokomo, indiana. 1,250 workers will be hired. $374 million investment and again it goes into the kokomo transmission plants. why are they investing in transmissions? it comes down to the eight speed and nine-speed production. they need to increase that to meet demand for the jeep grand cherokee. as a result, chrysler continues to expand here in the u.s. since fiat took control in the summer of 2009, they have added 8,000 jobs. chrysler sales last year, we should point out, the only member of the big three to be up
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20.6%. take a look at shares of fian in the last year, down 6%. there's a number of other issues when you look at fiat shares, particularly with what is happening in europe. we'll hear from sergio, the chrysler ceo. this is beginning to be a bit of a routine for him. we've followed him from rockford, illinois, to detroit, and now here in kokomo, indiana, as they announce another ex be pangs in auto production. guys, back to you. >> that's a good day to rebound manufacturing in this country. thank you, phil. we're 12 hours from the massive federal budget cuts known as sequestration and there's no doubt about the dire consequences. scott cohn has been looking at this. it's a fact check, something he does all too well. >> we try. in the $3.8 trillion federal budget, how bad can $85 billion be? >> this reminds me of when your
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local school board is saying we need this new tax increase and if we don't get t. we're going to cut the high school band and football team first. we call this the washington monument here. >> there are a bunch of programs exempt, everything from social security to pell grants. but the administration says that makes the required cuts under sequestration that much more painful. here's education secretary arnie duncan. >> so to act like there's some kind of magical thing that i could do or -- you can't -- kids are going to get hurt. kids are going to get hurt. that's just reality. >> duncan says with no action by tomorrow, some 17,000 teachers and teacher aides would be laid off. 17,000? let's go through this. nothing is going to happen tomorrow. this school year is already funded. the number is very rough. it comes from the amount of cuts divided by the average teacher's
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salary at $70,000. it is true that local school districts will be faced with tough choices very soon. if protecting our kids isn't enough, here is attorney general eric holder. >> the reality is, there is going to be pain and the american people are going to be less safe. that is just a fundamental reality that people have got to get their heads around. >> and getting their heads around big cuts in law enforcement, if you believe the justice department that says it will handle 15,000 fewer civil cases and 1,000 fewer criminal cases. that's based on the number of cases handled per attorney last year minus the furloughs that the customers require. that assumes that the sequester says in effect all year and a seven-day furlough would result in cases being dropped altogether. we're trying to get some information from the doj and whether they would in fact drop
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cases. >> that's right. a discussion about whose idea it really was, which is one of the great parlor games of the day. thanks, scott. scott cohn. straight ahead, what is twitter really worth? the numbers say as much as 10 billion but some say it's a lot less. before the break, another look at the markets as we inch closer and we mean inch closer to the all-time highs. dow up only by five points. back in a minute. [ man ] i've been out there most of my life.
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coming up up on halftime, is the rally based on fundamentals or solely on the fed? and despite the defense cuts, we have the names to buy right now. and tonight's earnings, will they keep the rally going for gap? top of the hour, carl. about 15 minutes away. >> scott, sounds good. one question is, is twitter worth $10 billion? dennis set out to answer that question in a column earlier this week. he said he tried to prove twitter was not worth 10 billion but the facts intervened and in response to that column, here to
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talk that out, the deputy managing editor. hi, guys. >> good morning. >> to your credit, even alex says you start out with a pretty good foundation. how would you start this argument? >>well, i really was trying to prove why companies like twitter doesn't have the valuation that they have but i tried to gather as many facts as i could and there are not a ton of facts out there but i kept saying to myself, you know, the opportunities for twitter to do poorly, for it to fail, those outcomes are relatively few in number. the ways in which you could see scenarios with twitter really has significant net margin, great operating revenue, and a significant trading multiple, it's not that hard to see five, six, seven different ways to get to a valuation of $10 billion or above. >> you tried to look at a number
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at which its membership with flatten out. you tried to look at a danger of foreign competition. >> what happens two to three years from now, we cannot say. but we have to remember, particularly internet numbers what they are today, they are looking two or three years in the future. given the growth rate of twitter which is roughly 40% last year, if we assume that comes down a bit and moves internationally. let's be careful. i would be careful to say how people value freshly public technology companies. look at the reaction to facebook's ipo. there was nothing hotter in the world and even on the first day of trading, bankers came in and propped it up and then it suffered a precipitous decline. this was the first few weeks of public trading.
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so we need to think of twitter as not a startup but under normal market dynamics and what not. >> facebook, of course, if you base it on where the revenues are for 2013, the price earnings multiple is through the roof and remains so if you look at the earnings for 2013 and 2014. >> it's still trading below its ipo price. the point here is that late-term private valuations don't reflect how the market will react to it. and that's what we're talking about. >> we'll get to the public argument in a minute here. let's back up, dennis, to revenue assumptions. >> sure. >> where are we? upwards of a billion, close to a billion? >> carl, these are assumptions and that's a good point that we don't really know what the numbers are inside twitter. the guidance that i was getting, the $800 million revenue
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estimate for a marketer was probably accurate. but the number for -- that i was hearing was closer to a billion. if you take the net margins on that, let's call them naturally organically, they can get to 30% margins. you've got a great business, carl. and i don't know if alex agrees or not, but it's an automated business. we give our content for free. geez. it's -- it can be a money machine. >> what do you think, alex? 40% margins sound a bit ridiculous, in your view. >> twitter is a very valuable company. it has a staying power. my argument, which is not politely put, we don't have enough real hard information to put a firm valuation on it.
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to quibble about 10 million, 9 billion or 8 billion, it's kind of talking to the air. we don't have the facts and figures to get to a firm number. >> sorry. go on, carl. >> to wrap it up, how do you think the story is going to end if and when they come to the public market? will this be well received? >> i'm optimistic about the company. >> i rest my case. he agrees with me. we're all doing it on abstract numbers but overall the numbers are good. >> it is a great debate. i just tweeted, i cc @jack. maybe they are listening, too. guys, thanks a lot. >> thank you. a new way to invest, start-up motive investing and do-it-yourself investing. we'll talk to the ceo after the break.
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with the dow near record highs, today's breakthrough offers an alternative way for investors to play the rally. each one called a motiffe, surrounded around every day ideas, companies that are most
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liked by facebook users. joining us at post 9, welcome. >> thanks for having me. >> let's talk broadly about the concept in general. you talk it jack bogul meets peter lynch. how does that work? >> what we do is take ideas at your senior daily life, peter lynch, and we turn those stocks into indexes and we call a motif, stocks built around real world ideas, healthy foods and you can purchase a motif up to 30 stocks and it costs you $9.95. no management fees. and you can customize it, tweak it, work with your friends using our social technology. our clients like to call it a conceptual etf that's
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customizable. >> a screen in 3-d that you could never do on an interface. so far you have 100 prebuilt motifs. now you're going live to this tool that allows to you built one out of your own head? >> exactly. we're announcing build your own motif. it allows a money manager to turn it into a motif and any time anyone purchases that, you can get a royalty payment if anyone uses your product. this is about build your own kind of financial product, really putting the power of investing into the hands of consumers. >> so you're going to built one right here, right now? >> absolutely. >> what's it called? >> the theme of the day is sequester. we call it it sequester is overrated motif. if you were looking at our catalog, if you type in something like defense, you can pull out different ways of playing defense. we already have one built in
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modern warfare. you can purchase that right now, customize it, if you want to go overweight smartphones, you can do that very easily by putting sliders out. pretty shoon you will go short a sector and if you like what you see, click buy here and literally two $50 or $100,000. you send it to market and you're done. but suppose you want to actually play the sequester, this is one that i started building right now. you can upload and picture and type in stocks, stocks like harrah's. you get all of these great ideas and now you can turn this in to a segmented weight of stocks and change your exposure. if you're worried about the sequester, you can increase your weight in defense spending or government contractors by moving the sliders around. and when you're done, you click
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next. and very quickly you can publish this motif on to the web so other motif users can find them. you can send it to your friend over e-mail or twitter or facebook and when you're done, you click send. >> there are infinite numbers of possibilities? >> there are. >> we'll talk about fees another time and monday ne tie zags. fascinating idea. thank you for coming in. >> thanks for having us. still watching the dow. don't go away. ♪ ♪
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